26/10/2015 Newsnight

My Lords they have voted. Content to. Not content 272. Therefore the

content has it. And with that, the Lords said to the

government - we're up for a fight What was an argument over those cuts

could have become a full-on constitutional confrontation,

until the government appeared to David Cameron and I are clear that

this raises constitutional issues that need to be dealt with. However

it has happened and now we must address the consequences of that. I

said I would listen and that is what I intend to do.

Was the Lords right to take a stand, or was it out of order?

And what is left of the government's plan to save money on welfare?

He was the most important man in the world economy, dealing with the

Former Federal Reserve Chairman Ben Bernanake is here with us live.

Why does every British law still have to be written on some of this?

The Lords are either heroes of the people - resisting

the worst excesses of the government as a second chamber should.

Or they're oversized and unelected and trying to thwart

It's not the first time we've heard the argument -

but it turns out the radical left is on the side of the Lords tonight.

What the Lords voted to do was force a delay on the government's

It was a stance of arguable constitutional propriety, but it

I believe we can achieve the same goal of reforming tax credits,

saving the money we need to save to secure our economy whilst at the

same time helping in the transition. That is what I intend to do at the

Autumn Statement and I'm determined to deliver at the lower welfare and

higher wage economy we were elected to deliver at the British people

want to see. The chancellor conceding this

evening that mitigating measures would be taken

in his autumn statement. With me, our political editor

Allegra Stratton and our economics A fairly amazing day. George Osborne

was having a good run. This is the biggest U-turn he ever had to make.

He has been in this post for six years and he is wounded on a number

of levels this evening. Personally, politically wounded. A week ago

people said they were adamant they were not to be shifting. They send

out some heavy hitters to say they would not be shifting but it did not

convince the Lords so he is politically wounded. He is also

strategically wounded, he thought he would get it through both Houses of

Parliament through a statutory instrument. And economically this is

a saving of ?4 billion and if he is softening it in any way we have

defined billions of pounds for the Autumn Statement in one month. And

his rebranding is weakened, he was met to reposition the Tories as the

party of workers. Boris Johnson, his people are cock-a-hoop, thinking it

creates space for them to come through the middle. But whatever

happens in one month, by the end of this Parliament tax credits will be

performed in the way George Osborne would like. And that will be his

legacy in the fullness of time. Just in the public finance terms, 4.4

billion between friends, can he lose that? Well he would rest on what was

called the pasty tax and that was small change compared to ?4.5

billion. The problem is the Chancellor said tonight he will

continue to save money and also mitigate the impact. It is hard to

see how he will do that, hopefully all will be revealed at the Autumn

Statement at the end of November. If your triple checked pensioners and

take money from welfare, there will be losers. We do not know how much

the mitigation would be but even if it was a complete reversal of that

4.5 pounds, it sounds like a lot but the Chancellor Woods still just get

to a surplus at the end of this Parliament. Not by very much but on

current numbers he would still just about hit it. Economic week the

difference between a small surplus and small deficit might matter a lot

politically. Well there are two issues

at play here - tax credit cuts, and the right of the Lords to have

their say on them, or not. Our policy editor Chris Cook spent

the day following the Lords debate. George Osborne announced a big shift

at the July budget. The rabbit in his red box was a rise in the

national minimum wage but offset by deep cuts to tax credits.

The sheer scale of tax credits is subsidising lower wages in a way

that was never intended. So those who oppose any savings to tax

credits will have to explain how on earth they propose to eliminate the

deficit, let alone run a surplus and pay down debt. At the time papers

who had supported the Conservatives at the May election welcomed the

move. Nonu went quite as far as the Daily Mail which canonised the

Chancellor into Saint George. That all seems quite a long time ago.

That Dragon now looks a bit weak. The tax credit cuts will take ?4.4

billion from 3.3 million households. An average of over ?1300 a year. And

the higher minimum wage will not close that gap. Disquiet about the

tax credit proposals has been growing since they were first

announced in summer and today they reached the House of Lords, just

behind the aunt of the picture George and Dragon. Here are

considering five potential puzzles ranging from out wide acceptance of

the plans through to outright rejection. There is a question about

how far the peers can go when dealing with a measure of this kind.

There are two reasons why there has been controversy about the

constitutional edition, regarding the convention of what the House of

Lords can do. A statutory instrument is a small matter that goes through

I much prefer a parliamentary process than ordinary law. It is

presented to both chambers on a take it is presented to both chambers on

Tay it basis. The House of Lords nominally has a veto but does not

use it. And then it was a financial measures and traditionally the House

of Lords does not get involved with financial measures. But we heard

arguments on both sides about what is constitutional or

unconstitutional and it is far from clear cut. In the event most years

took the view that the code after all have a crack at this

legislation. Baroness Hollis and Labour peer, put down one moment. It

delays the desired to ask the government to provide transitional

protection for families who are doing everything we asked of them.

Who trusted the Prime Minister that tax credits would not be cut. And

they trusted Parliament. My Lords when we said we would make work pay.

The Lords passed the proposed amendments including that of

Baroness Hollis. The voted to withhold consent of the cuts until

the government gave protection for a minimum of three years to families

who now receive tax credits. It is not comfortable for George Osborne

being told by unelected peers that you're out of touch with the

question is what he is going to do next. This problem is there are just

no easy fixes on tax credits. There are options such as cutting income

tax or national insurance. Tax credits actually are well targeted

on low income families generally with children, who are in work. And

so any change to the tax system would likely cost more money than

the original tax credit saving. And be less well targeted on families in

greatest need. There is another issue. This is the first majority

Tory government since Labour removed the Conservative hereditary ramp

from the House of Lords. It is always been defeating Labour

government but now with the defeating the Conservative

government for the first time because this is the first

Conservative majority governments since that reform. And the party

does not have a majority in the chamber. So we now have a situation

where the Lords can challenge Conservative government from the

left rather than a Labour government from the right which is quite a

change in British politics and rather uncomfortable for this

government. George Osborne says he is listening on tax credits but we

do not know what he will do. He says the vote has issues that must be

addressed. So a defeat for the government denied for sure but we

just do not know what is to follow. Tonight it was a motion proposed

by Labour's Baroness Hollis that caused this so-called

constitutional crisis. She's just come from her victory

in the Lords and is with us now. And so are two Tories of differing

views about this prickly predicament for the government -

the MP Jacob Rees-Mogg and activist Baroness Hollis, did you have any

qualms at all about the constitution of what you were proposing? No, if

the House of Commons wishes to claim financial privilege, which they are

entirely entitled to do, on for example an amendment to a bill, it

can be overturned in the Commons and the Speaker may give no reason and

simply say we certified as a money issue and that is that. So the

government could have done that, included it in the Welfare Reform

Bill for example. It chose not to get the protection of financial

privilege there. Secondly the government could if it had chosen,

on the other route of financial privilege and put it into a money or

supply finance bill. It did not do that either. So you feel entitled to

have a go at it? Disagree government did not seek or claim financial

privilege. Then when it comes up and says, actually, please assume we

wanted financial privilege. We did not ask for it but give it to us

anyway. Against that a 3 million people facing cuts. Jacob Rees-Mogg

you suggested the government create 100 years to override the Lords

decision. It is an extraordinary rich of the conventions and an

attack on the House of Commons money privilege on ?4.5 billion of

expenditure. Since 1860 this is the third occasion on which the House of

Lords has overturned the Commons on something relating to taxation or

expenditure. In 1868 was the painful duty would be liked, in 1909 it was

the People's budget and now this. The argument on the Commons

privilege on tax and expenditure long predates the creation of

statutory instruments and... Why did the government not choose to do as

Baroness Hollis suggests and introduce this as a financial

measure. Because this House of Lords has never overturned a statutory

instrument relating to money before. It has overturned a small

number, four or five statutory instruments since 1968. They only

came in in 1946. It is rare for the Lords vote down a statutory

instrument and unprecedented for them to vote down one on spending

four point ?4 billion. The government should have done what it

greatly goes and claimed financial privilege. It does it all the time

and it chose not to do it on this. And then afterwards said, please

treated as though we did. This is an attack on the House of Commons and

not on the government. It is the House of Commons Rutledge, the

Democratic ridged to determine taxation and spending. It is a

privilege inherit the subject matter. We have heard that debate.

Are you still proposing the government should create 100 years?

You think it now needs reform? There is a serious problem if the House of

Lords is going to overturn conventions. Up until the removal of

hereditary peers the Conservatives had an in-built majority but they

observed the conventions because they wanted to maintain the House of

Lords and said they were careful about exercising theoretical powers.

It is now a left-wing majority in House of Lords which in six months

of Conservative government has overturned the most important

convention, the taxation and expenditure is the prerogative of

the House of Commons and so the government needs to do something to

govern effectively until 2020. Is there an appetite in the

Conservative Party now to have a constitutional tussle with the House

of Lords? I do not think so. And just a month ago, just after David

Cameron has given his party conference speech, in which he

relaunched the Conservative Party as a 1 nation Conservative Party, to

try to stuff the House of Lords with 100 peers, to enact legislation that

cuts the benefits of the working poor, that is

cuts the benefits of the working for a party that is trying to

present itself as blue-collar friendly. So it would be

constitutionally difficult, but to do it for something that is so

controversial, so officers to where David Cameron says he wants to take

the Conservative Party, I do not think there is a chance in any

rational political sense that the Conservatives would do this. There

is a bit. It is not necessarily the most popular issue on which to

create 100 peers. But if the Lords within six months are willing to

overturn conventions, the government will have further controversial

business to introduce between now and 2020. If Lords are going to

break convention and overturn things that ought to go through smoothly,

the government will have great walk years. -- more peers.

In the President? Now, because they want the privilege, they should

claim it. They want you to behave as though they did. The law is

generally respects a manifesto commitments but unfortunately, this

was not in the manifesto. There was talk of welfare cuts but from my

experience, people did not think that those would be targeting people

in work. They had a false, unrealistic image that it was people

out of work. The government does not have the cover of a manifesto

commitment. David Cameron, as you know, made a public pledge twice

that they would not cut tax credits. But it was more ambitious than that.

The unelected house works properly when it will praise the conventions.

If this is a sign of regular breaches of convention, and the Lib

Dems have said they will not necessarily follow the convention,

then the Lords will need more appears to make sure the government

can get its manifesto through. What will the government to do about

this? George Osborne says there will be something in the Autumn

Statement. What would satisfy you? As a sensible way forward, I would

like to insure that the cuts only affect new claimants. Not existing

families, families who have done what we have asked for and have

built their life around what they are getting from the wage and income

support. Those families need this money. I have been reading letters

and e-mails from people saying, I am terrified when the Christmas letter

comes with the knot of occasion that I will lose ?3000 on a low

income... So new rules on new claimants but the old rules apply

for three years on old claimants? Exactly. Is this a retreat that will

ultimately benefit the government because it was turning out to be a

political headache and it was going to come back to the Commons. Some

said there might be more issues. And now, actually, it has a chance to be

dealt with. There is a difference in interest between George Osborne and

the Conservative Party. It has probably heard George Osborne's

authority. No chance likes to make a U-turn. This could have been very

difficult for the Conservative Party. There was evidence that 71

constituencies, the 71 most marginal Tory MPs, the number of people

affected was greater than the majorities. Of course you have to

cut the deficit but when at the same time you are cutting inheritance tax

for the wealthy, when we have evidence that pensioners are better

off than the average citizen, that they are getting a 2.5% increase in

pensions, when inflation is falling, to make these kinds of cuts

to the working poor, when the Conservative Party is presenting

itself as creating so many jobs, this is a bad position for the

Conservative Party. On the substantive issue, the only thing

worse than the U-turn was to actually do the original plan. It is

difficult. The Chancellor had ?4.5 billion worth of savings lined up

from a budget that had gone from 1 million times -- ?1 billion to ?30

billion. It was an expensive programme and we know that cuts need

to be made to balance the books. Chancellors have to make difficult

decisions. I think conservatives sometimes have to supports

chancellors with the means when they are difficult. Not all decisions and

government are easy. Old chancellors, good chancellors take

difficult decisions and stick to the thrust of them. But targeting the

working poor, was that really what we came into politics to do? The

government has made clear that the package as a whole will make sure

that people benefit. That is not true. I trust the government. You

might think I am naive but when the Chancellor says that the overall

package will insure that nine out of ten people are as well-off... That

is you and I. Eight out of ten is you and I. Its people getting tax

credits. It isn't, it isn't. You are right on that particular point. It

is benefits to help people with children in nursery education and so

on. The Chancellor has to make difficult decisions, and we have to

balance the books. One final question. What did you think you

were doing in the election campaign to put in ?12 billion of welfare

cuts, unspecified. Where were they going to come from? I will let you

into a secret. The Conservatives did not expect to win the general

election. There were promises made that they thought would be traded

away in coalition negotiation. Things like the right to buy for

housing associations. The Tories did not expect to have to make those

cuts. And of course, they are discovering the difficulties. We

will leave it there. It is amazing to reflect on the fact

that in the last few decades, professional economists have had

more power over economic policy than ever before, running independent

central banks around the world. And yet, in no time,

the world was engulfed by the worst economic crisis anyone could

remember - that financial crash One man who was right at the

centre of things was Ben Bernanke, an economist whose specialist

subject was the depression of the 1930s and who ended up in charge

of the US central bank for the great recession of the 2000s,

and who has just written I am honoured to announce that I am

nominating Ben Bernanke to be the next chairman of the Federal

Reserve. His timing could have hardly have

been worse - He got to the post just

in time to get his feet under And what

a storm it turned out to be. Meltdown on the markets as Wall

Street is left reeling from some of the biggest blows in its history.

Perhaps the key moment of the crisis was the collapse

Ben Bernanke had hoped that a rescue might have been orchestrated,

The UK, scared of inheriting Lehman's

Lehman toppled, and with it, confidence in the world's banks.

The next six years of Chairman Bernanke's career was spent

Including putting hundreds of billions of dollars into the US

economy through quantitative easing. What better career

for someone who'd once been a young professor, studying the mistakes

of economic policy in the past? And he hasn't changed a bit in all

those years. Ben Bernanke is with us. Good evening. Could we go to

that Lehman Brothers collapsed moments? I think some US policy

makers, deep down, blame the Brits for stopping Barclays taking over

Lehmans, which would have made an enormous difference. It was a

crushing blow at the time because the British would not allow Barclays

to acquire Lehman Brothers. But a couple of things, I understand why

the Chancellor did not do it. He did not want the bad assets to end up on

the British taxpayers doorstep. And we tried desperately to save Lehman

Brothers. Even if we had saved them, something would have failed

eventually because Congress would not act until they saw the

consequences of a failure. So there would have been a big crisis?

Eventually, I am afraid, yes. Your political journey comes off in the

-- comes across in the book, you start off as a small government

Republican and become persuaded that there is a role for government. You

talk about having to stop people buying certain products like

inflammable pyjamas for children. And I don't think you had the view

at the beginning, you thought there would be more personal

responsibility. Tell us about that journey. I always took a moderate

position. I think the market is critical for a good economy but the

government has a role to play. I think the party left me because the

tea party and the extremes of left and right left me in the middle, and

many other Americans, I think, who would like a more balanced approach.

Unfortunately that is not worry are right now. Who would you vote for in

the next election? I don't know what I am registered. I did not vote as a

matter of principle when I was chairman. Those on the left look

back at the last 30 years of the neoliberal consensus, neoliberal

economics, and they see that as an ideological stands, that the world

took, after Thatcher and Reagan. Are they right to see it as

ideologically or is that just technocrats doing their best for the

world? I think in the case of the financial system, there was too much

deregulation. The regular system was put together in the 30s during the

great depression and it did not keep up with what happened, the

innovations and change, and so when the crisis came, we did not have the

tools and the vision. We could not see what was going on. I am not sure

I would indict the philosophical approach. I think we need good

regulation and that is what is happening now. What about austerity?

In the book and in subsequent interviews, you have criticised

governments for pushing too hard on the fiscal retrenchment, leaving a

lot of pressure on you guys doing the monetary policy to put your feet

on the accelerator while the government is putting their feet on

the brakes. Was that ideologically? It was very practical. I think too

much burden has been put on central banks to carry the recovery. The

fiscal policy has focused too much on short-term cuts and austerity. I

think when you have millions of unemployed, it is not the time to be

making sharp cuts, to be doing sequester us and fiscal clefs and

all the things that have happened in the Congress. What about the -- what

about Europe and the UK? I think it depends on the circumstances. Greece

is not going to do fiscal expansion but a country like Germany has scope

to do that. And the UK, I am not an expert but I think the UK was

somewhere between the Europeans and the US and it has had a decent

recovery, as you know. The UK fiscal stands is coming to a neutral

position. It was a little tight early on and perhaps they could have

done better. I asking because we have this charter for budget

responsibility which will mandate a budget surplus under normal

circumstances. Would you consider that fiscally responsible or

irresponsible, making the life of central bankers harder? It depends.

If you are in a recession and the period of high unemployment, I think

you need to be prepared to have a deficit in those situations, and

understand that in periods of rapid growth, you will concentrate on

that. I would not want to do that all the time. But do you want a law

that says you have to have a surplus except under predefined

circumstances? I think that you want to have the flexibility to respond

to national emergencies. In particular response to recession

is, like a deep one we have just come out of. Looking back at the

crisis, clearly the public were left quite angry, with the sense that

they picked up the bills and other people got away with it. Bluntly, do

you think more bankers should have been put in jail? I think the

Department of Justice's strategy could be more focused on individual

responsibility. They find the big institutions billions of dollars.

What was the individual responsibility? I don't think we

know the answer. Because we didn't bother to look. That was my concern.

Let's talk about the policy regime. If you were writing a note, you were

going to write it on vellum and bury it. If it was a letter to

policymakers in 60 years' time, giving them the benefit of your

advice, having been through this crisis, what would the pithy single

piece of advice be? I think when the situation is looking benign, that is

when the risk is building, so be vigilant. And that was the story of

the precrisis power-down? That was what happened. And how do we get out

of the paradox? Vigilance. If we look carefully and pay enough

attention, then we can withstand the shocks. But you are great land of --

a great fan of inflation targeting. We were looking for inflation but we

did not have it. Meanwhile, a wolf came in the back and did a great

deal of damage to financial stability. Do you concede that you

need a financial instability remit in monetary policy as well as an

inflationary policy? With the central bank -- the central bank,

the Fed has extensive resources to monitoring -- devoted to monitoring

for problems. Monetary policy does not have to do everything. I think

regulation, supervision, oversight, macro credential policies, those are

the first line is that we should take. And how we rectify these

problems? We will never do that completely but we have made

progress. Ben Bernanke, thank you. How should teachers deal with pupils

whose behaviour is out of control? They are allowed to use force

as a last resort, but unions have told Newsnight that an increasing

number of their members are worried if they do so - even in quite

legitimate circumstances - they Secunder Kermani spoke to one

headteacher who nearly lost For these children this classroom is

their last chance of staying within the school system. Social and

emotional difficulties mean other schools have not been able to handle

them. It also means that at times dealing with them can be

challenging. This is how teachers in both special

education and mainstream schools are taught to physically restrain

pupils. It is always meant to be a last resort, never a punishment. The

need to protect the child and others around them. But of course it is

controversial and can have serious consequences for the child and for

the teacher. Trystan Williams had won awards as a

headteacher dealing with challenging pupils at mainstream schools. Two

years ago he tried to help avoid who was at risk of seriously harming

himself. And it almost cost him his career. I attempted to lift the

young man up. In the process of trying to lift him off the floor he

pulled me down on top of them and sustained an injury. I was alone

with the child and under the circumstances sadly, the external

agencies felt I had a sort of the young man. I just thought I had

winded him, I had no idea of the catastrophic events that were going

to happen. Trystan Williams was suspended and subject to a police

investigation. After 12 months he was cleared and returned to work in

another school. To have that taken away from you for simply trying to

do your best, it actually drove me to consider... Whether I should

still be here. You know. And when that happens, you think I have

sacrificed a lot for transforming lives and this is the way I get

treated for trying to do my best. That is difficult to come to terms

with. Then when my wife, obviously she needed support and my boys are

having psychiatric counselling and help. Because they could not sleep

at night and did not want to go to bed in case daddy got locked up.

That was hard working. Trystan Williams's case is extreme but not

the only one. We have heard of other examples of investigations going on

for months before teachers are eventually cleared. At times some

have even been driven out of the profession. We are dealing with a

couple of cases per month on average that has come to a difficult

situation where someone has been suspended or faces some kind of

challenge as the result of that. That hides many more were decisions

had not been made upon public and were perhaps children who should

have been restrained have not been restrained because professionals are

not certain as to their powers and rights. The Department for Education

guidance states teachers should not be suspended automatically when a

complaint is made. And that 90% of investigations should be completed

within three months. Unions believe that is not happening. The last time

the Department for Education counted, 74% of cases concluded

within the time. They do not have up-to-date figures but advise

schools that cases should be swiftly investigated. Allegations of misuse

of restraints are serious. In August the school in Devon was closed down

as police examined claims that staff used excessive force on pupils. And

this is footage of primary pupils in Tottenham being restrained last

year. The school and council reviewed safeguarding procedures and

Ofsted cleared them of wrongdoing but some parents were furious. How

often are you in scenarios where a restraint is one of the options?

Teachers at the school managed to dramatically reduce the number of

restraints they use by concentrating more on de-escalation. September it

49 times, the September just one time. But the knowledge that

restraining a pupil could end their career is a constant concern. I was

suspended for eight months. After two weeks the police had

investigated and cleared me. But you go through the emotional stresses

and strains of waiting for governors to confirm the decision that you can

come back to school, come back to work. You're not necessarily given

the protection that we deserve as professionals. Nobody wants to do

it. It is dreadful for them, horrendous for us and at the end of

it you over analyse everything constantly. What could I have done,

could I have done that differently. It is a horrible situation to be in

but at times it is necessary. Bernard Allen helps to train

teachers and acts as an expert witness. He says there needs to be

more consistency on how guidelines on the straights are set out. It is

better management and supervision required to stop the bad people

abusing the powers. But the moment it is decided in different areas of

the country by different individuals. What is good actors in

Dorset is considered abuse interim and that is the situation we have

had for 25 years. Trystan Williams and that is the situation we have

is now headteacher at another school but worries that what happened to

him could still happen to other professionals. That could happen to

anybody in a school similar to mine. Wrong place, wrong time. Complex

situation, trying to do the best. And your life will never be the same

again. Trystan Williams ending that report

by Secunder Kermani. We started on tax credit cuts -

let's finish with another idea A committee of MPs has suggested

that ?80,000 could be saved if acts of parliament were no

longer printed on vellum made At the moment,

the practice is to print two such copies of each act, one

for the National Archive and one for A key feature

of vellum is its longevity. Replace vellum with paper -

even the most expensive, thick kind of paper that you buy

at the poshest of stationery shops Well, we have some vellum now,

live in the studio. I'm with Paul Wright who runs

the last surviving vellum works Good evening. How does this get

turned into a piece of act of Parliament, for example M if we go

back to the start, one of the supermarkets put in an order for

beefburgers and we going and take a by-product. Not killing animals for

this? It is just going in the bin. Then we go into this 1000 -year-old

process of soaking it, getting the skin to the and then setting to with

this what is called a lunar. Literally we shave and scrape. You

do not do this by hand M everything is done by hand. We have no machines

to do it. It takes about seven years. And this is why it costs ?14

for a sheet. It was but into that ?14, what do we get for that? You

get about 5000 years of secure data storage. The world... It sounds like

a long time. Looking at the dead Sea Scrolls, found in the back of a

cave, 2400 years after they had been written. They were stumbled across.

That is a long time. Can find no reduce something that can do better

than this? Sadly for silent -- the science and gladly for me, they

cannot. We got involved with a project in 2000 and people wanted to

bury data for 1000 years and went all round all the technology

companies in the world saying, convince us that in the year 3000,

we can recover this data and it will be good. Who do you sell it to,

apart from the records office? It goes to calligraphers, illuminators,

botanical artists, hobbyists. It goes all over the world. We are

considered the finest in the world. What to use to write on it? Cast

your mind back to the Bronze Age, if they managed to do it with a bit of

Bernard Twigg, everything forward of that works. If you want to do it

with a Biro, that will work fine. If you want longevity it is the ink

that becomes the limiting factor. If you take an archival ink and applied

to this than I could give you a piece today and you could write and

it would be round in a thousand years. Could I print a photograph of

my other half on this cruel printer in my lounge? Absolutely. So there

is a market, people would love something that costs ?14. We do do

things, we have printed best man speech is, specialist speeches from

father to daughter, all kinds of things. Good luck with the business,

that is really interesting. It has been a pleasure.